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Originally Posted by Daithi
How do we know that Amazon is actually taking a loss on the best sellers? I've heard this premise stated on several occassions, but is this a documented fact or is it just conjecture?
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Every bookseller calculates the amount owed to the publisher based on the publisher's list price for the book. Note that it is the publisher's list price, not the actual selling price.
I do not know what the precise agreement is between say Random House and Amazon as regards percentages. I believe the split is 65-35, with the publisher getting 65%, which means on a list price of $24.95, the publisher would get $16.22 and Amazon would get $8.73.
Even if Amazon isn't losing on every sale, it is making at best pennies and nickels, not enough to sustain a business model.